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ABSTRACT
Post COVID-19, there has been an emphasis on a growing alternate economy which was shadowed by the traditional economy till then. This economy has witnessed a great deal of prominence following the consequences of the COVID-19 health crisis and it was generally known to the public as the gig economy. With India trying to emerge as a global economic power in the current international dynamics, will gig economy be a major contributor in achieving the economic goals?
This paper probes into the current scenario of the gig economy in India, and issues surrounding the matter for it to be an efficient contributor to achieve India’s economic objectives and proposes the potential achievable strategies for overcoming the issues.
1.Introduction
The term “GIG” was derived from the music world where a performer books his gigs or short term engagements. The GIG economy can be defined as a work characterized by its temporary nature, contractual or a freelance work coupled with flexibility in terms of schedule of the work and the independent nature of the work whereas on the other hand, the traditional standard economy is a long term commitment between an employee and employer in an organizational setup.
Further, the gig economy can be classified into two types i.e. platform workers (gigs worked over through an online platform/service) and non-platform workers (workers associated with daily wages,etc).
The reasons for a sudden upsurge in gig economy can be attributed to the increasing globalization at a rate never seen before, advancements of digital technology, lifestyle changes such as need for work-life balance, need for closer affinity with family, increase in unemployment rates due to global disruptions, desire for personal autonomy, etc., and the pandemic has induced the required momentum for its boom cannot be left unhighlighted.
2. India's Vision
Currently, the Indian economy is estimated to be around $4 trillion and is set to become the world’s 3rd largest economy with a GDP of $5 trillion in the next 3 years. Becoming an economic power is the long-term goal for India, it is time that the nation-state look at ways that are blooming alternatively such as the gig economy.
The long-term goals and commitments of becoming a $10 trillion economy by 2030 and subsequently the Vision@2047 of becoming a $30 trillion economy by 2047 is not farfetched when the booming gig sector is inculcated within the plans.
3. Gig Economy and the world
The gig economy in the world in 2024 is valued at $556.7 billion and is projected to a whopping $1847 billion by the year 2032 at a CAGR(Compounded Annual Growth Rate) of 16.88%. This number shows the range and the potential at which the world can witness the normalization of the gig economy at a very large scale over a few years.
The USA holds a large amount of share with respect to the valued business of the gig economy in today’s world. However surprisingly the majority of the South Asia-Pacific nations like India, Pakistan, Bangladesh, Vietnam, Australia, etc., hold considerably a strong market and have an indemnified potential for growth in this particular era of digital technology advancements and the booming startup ecosystem especially in India.
It is imperative that this economy is bound to grow as the people constantly look for alternative sources of income. This is also an indication that India has the ability with its population to tap and further enhance the gig economic sector to heights that play a key role in the vision of India’s economic objectives.
4. Gig Economy and India
As per the NITI Aayog Report(2022), India is witnessing an upward trend in the workforce of gig economy and is projected to expand to 23.5 million people by the end of FY30 and consequentially increases the value of gig economy which is valued at $20 billion.
The graph above shows an exponential growth of workforce which is a positive sign for India that it can hypothesise that GIG economy workforce will be a major push for achieving its economic objectives.
Within the workforce, the sector is further classified into 3 main components: High Skilled; Low-Skilled and Medium skilled. They hold the share of 22%, 31% and 47% respectively signifying there’s a possibility to create a platform for upward mobility.
High skilled workers are professionals with advanced education and specialized skills such as IT, Design and Management. Medium skilled works in areas such as machine operators, warehouse workers,etc. Low skilled workers are people who involve themselves in microtasks such as cleaning, housekeeping,etc.
To add on this, the employment elasticity to GDP ratio of gig workers is always above one(1) in the last decade.i.e.2011-2020 and was always above the overall employment elasticity value. This means that the rate of employment grows at the same rate as the GDP of the country.
In reference to growing trend which can be observed from the datas extracted and with the growing efforts of digitisation from the government, it is crucial for India to incorporate gig economy into its larger plans for effective exploitation of the fruits its going to bear in the coming future as it has the potential to do so.
5. India and US: A comparative analysis
The caveat in the above analysis is that the GDP values in the above graphical analysis are not really comparable as the USA is 8x of India’s GDP value.
The analysis shows India taking a back foot on the majority of the criteria when compared to the US. USA being a front runner of gig economy due to multifaceted factors such as higher rate of digitisation, higher disposable income and economic development.
In 2024 Oct, the Supreme Court of USA quashed the challenges raised by Uber against the California Assembly Bill which states that “gig workers are classified as independent workers or employees” in order to avail the workers with social benefits.This recent event of redefining “gig worker” is a clear exhibit of how USA has even started inculcating the qualitative aspects of the sector for creating effectivity in the economy.
Inspite of being an emerging nature of Indian economy, India is catching up and is currently ranked as the 5th largest gig economy in the world because of the blooming startup ecosystem and growing freelancers among the population of nation state. However, India faces barriers on multiple fronts.
6.Problems pertaining to the gig economy in India
The scene of India’s gig economy is a recent phenomenon which has given rise to a considerable amount of issues within and around the sector involving various kind of stakeholders on and off the field.
1. For the Government:-
● India has taken a leading step in coming up with the Code of Social Security,2020 for the gig workforce. However the issue of lopsided or unavailability of data resulting in only estimates of the workforce made using the NSSO and PLFS surveys leads to causing a deprivation to access to these social security by gig workforce.
● The approach or the methodology through which the government is estimating the workforce is often criticised. This can be observed as a whopping share of 62.4% of the gig workforce are a part of informal sector out of the total gig workforce. According to a BCG report, there are 90 million jobs that are gig-able in domains such as construction, logistics, etc. which are transferable to platform based thereby potentially contributing to 1.25% incremental GDP over the long term and transact around $250 billions/year. However the unavailability of accurate data doesn’t help the nation to take a leap towards working it.
● Another issue faced by the government is regulation of the running platforms in the nation due to the absence of data protection laws and the absence of laws concerned to gig economy strictly.This is because of the dichotomy of attaining the right balance between the workers and the platforms.
2. For the Companies/Platforms:-
● Though the world has witnessed the growth of companies such as Uber, Swiggy, etc., there is still hesitation by the traditional industries in order to adopt the framework of gig economy due to the fear of moonlighting1 by the employees.
3. For the employees
● Despite of the flexibility and independent nature the gig sector provides, receiving timely payments has been an issue at the forefront for a while now.
● The level of income received through these gigs is often very low as shown in the comparative graph between USA and India. It is because of very large section ofthisworkforce is indulged in low and middle skilled gigs.
● The issue of necrocapitalism where Indian aggregators takes full advantage of the grey areas to exploit wage payments and working hours. For example, a taxi driver working for 16 - 20 hours a day suffers from health issues such as backache, etc., is not offered a health/accident coverage under the false pretence that “drivers are partners and not employees” by the aggregators/platforms.
● The issue of digital literacy is another key factor in obstructing the
transformative capacity to enable financial inclusion of the informal gig workforce in India.
1 Moonlighting is an act of working at an secondary job in addition to the primary employment. The secondary job is taken without primary employers’ knowledge. However this act raises the concerns of confidentiality for the primary employer and also effects the productivity of the employee due to lack of sleep,poor diet and exercise which in turn impacts negatively on the primary employer’s institution.
● In a patriarchal society, women often face their daily dose of discrimination like unequal pay, sexual harassment and safety issues, etc. Globally, the average pay of women in gig workforce is 11% less as compared to men. In addition to this, there arises the problem of algorithmic discrimination-an extended arm for societal prejudices against women. In the APEC economies, the women in the gig workforce accounts for 19-56% showing the significance of women’s interest in inclusion into the economy. However the issues faced by women are taking a new shape rather than eliminating them.
It is a functional imperative for India to deal with the issues at hand and provide a smoothening way for the gig economy to work in order to ensure to achieve the desired objectives for becoming a global economic power and achieve its Vision@2047 i.e. $30 trillion economy.
1. Policy Solutions:
● Enforcement of Data Protection law coupled with the e-Shram portal which was launched for registering the unorganised workforce should be implemented on prioritisation for enhancing the financial inclusion thereby increases the effectivity of the introduced “Code of Social Security,2020”.
● A separate committee under the Ministry of Statistics and Program Implementation in collaboration with Office of Registrar to create a Gig Economy Survey on the lines of USA’s that conducts large mixed mode survey throughout the year to provide self employment estimates.
● Collaboration with social agencies like NGOs to enhance upskilling of people to bring in the informal workforce into this sector through aggregators and transform their lives in order to derive the benefits availed by the formal workforce. \
● A framework for clearly defining the terms in correspondence to the gig economy to be established by setting up a reiterating committee in this aspect.
2. Corporates in order to transcend the traditional working models can work on the following:
● Employment and Business Member Organisations have to adapt the changing working landscape in the current digital economy. They should open their doors
for students who could work with them on a contract basis by collaborating with educational institutions.
3. Aggregators/Platforms Solutions
● Platforms can implement 24*7 gender inclusive communication helpline and plans and a better inclusive model for functioning for improving the levels of accessibility to women.Work in tandem with local police stations for ensuring safety of women by establishing a live tracking module in the platforms for the duration of service with an alert system.
● The onus of responsibility in providing the insurances required based on the profiles of the workers should be enabled in tandem with the insurance schemes provided by the government as part of their welfare schemes.
4. Others:
In addition to the solutions with respect to the stakeholders, the Indian government should be emphasising on correlated issues such as last mile internet connectivity, upskilling of people, creation of awareness among the people about the positive attributes of gig economy and provide a safe ecosystem for this sector to help it becoming a major contributor for the long term commitments of India to become a global economic power.
8.Conclusion
India’s active implementation of policies, strategies along with a feedback mechanism and a balanced regulation and monitoring with respect to all the stakeholders helps thrive the gig ecosystem and thereby creates a domino effect on the economy in other fields such as increase in the number of freelancers, development of startup ecosystem, etc. This will streamline the pathway that India has laid before itself and could even heighten its scope by becoming a leader in strategising with respect to gig economy. The power of compounding is often forgotten by even the greatest leaders. Today’s small step creates a big impact for the future of India.
Meet The Thought Leader
Laboni is a mentor at GGI and is currently working at The Bridgespan Group as a Senior Associate Consultant. She takes interest in socioeconomic development issues, public policy, and equity across
different vectors of gender, caste, class, and ability, which in turn fuelled her transition from working at a global bank to the social sector. She is an Urban Fellow from the Indian Institute for Human
Settlements, Bangalore and has a bachelor's degree in Economics from
St. Stephen's College, University of Delhi.
Meet The Authors (GGI Fellows)
Pavan is a civil services aspirant strengthened by the knowledge acquired through the years of preparing for Union Public Services Commission(UPSC)who is profoundly interested in the world of Business, Management and Policy Consulting.
If you are interested in applying to GGI's Impact Fellowship program, you can access our application link here.
References
● https://www.businessresearchinsights.com/market-reports/gig-economy-market-102503#:~:text= Gig Economy Market Report Overview,16.18% during the forecast period.
● International Labour Organisation’s Report on “ Expansion of the Gig and Platform Economy in India”
● NITI AAYOG Report on “ India’s Blooming Gig and Platform Economy”
● https://blogs.isb.edu/bhartiinstitute/2024/09/03/indias-gig-economy-challenges-opportunities-the future/#:~:text=A BCG report estimates that,economic growth and job creation.
● https://hr.asia/top-news/india/indias-gig-workers-remain-undocumented-and-unprotected/https://www.apec.org/press/blogs/2024/unpacking-issues-in-the-gig-economy-how-can-we-emp ower-women#:~:text=Sometimes female gig workers can,women take higher paying tasks. ● Working Without Borders: The Promise and Peril of Online Gig Work by the World Bank ● https://www.isb.edu/en/research-thought-leadership/research-centres-institutes/srini-raju-centre-f or-it-and-the-networked-economy/SRITNE-Newsletter/Gig-Platforms-and-the-Future-of-Work/Wo men-Inclusion-in-Gig-Economy-An-Unfulfilled-Promise.html#:~:text=Platforms can also implement gender,them within the gig economy
● https://www.business-standard.com/economy/news/india-to-become-3rd-largest-economy-with gdp-of-5-trn-in-3-yrs-finmin-124012900483_1.html
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